In a competitive industry ripe for disruption, the future belongs to the brokers and owners who are holding more cards than their competition. It belongs to those who have the right data at their fingertips.
In 1914, Henry Ford had more momentum than any entrepreneur on the planet.
In 1913, his company had doubled its production of the revolutionary “Model T” line while doubling the amount of employees at the company.
In 1914, he doubled it again — but this time, he did it without adding any employees. They were creating more revenue than ever while payroll was actually falling.
Rather than sitting around counting his money, Ford and his core leadership group were looking for ways to improve, and I imagine they fell across a staggering statistic — 370 percent annual job turnover. The assembly line work was mind-numbing, and employees were leaving in droves.
The company took massive action. First, it modified its nine-hour shifts to eight hour shifts, and rearranged the time slots to create flexibility for workers. Then, it did something no one expected — it doubled workers’ wages.
Post-decision data analysis over the next year proved this to be a very lucrative decision. The company lowered turnover to 16 percent. Productivity was increased somewhere between 40 percent to 70 percent. Ford was able to cut the price of his automobile in half over the next year, all of which played a part in his legacy.
History’s most legendary business leaders sometimes make unexpected decisions that seem irrational to outsiders because they are holding more cards than anyone else. They’ve got all the data at their fingertips, and they apply their genius accordingly.
In a competitive industry ripe for disruption, the future belongs to the brokers and owners who are holding more cards than their competition. It belongs to those who have the right data at their fingertips!
Here are my four crucial data points for any decision-making brokerage owner or team leader.
Red-zone conversion ratios
With so much data available across your multiple systems, it’s easy to get lost in numbers that don’t directly impact your bottom line. Everyone talks about conversion ratios, but there are ratios that impact your bottom line more than others. I call these red-zone conversion ratios.
Every listing appointment your agent takes or buyer consultation they conduct is an opportunity with revenue attached. If your average price point is $300,000 and your average commission rate 2.8 percent, the opportunity value is $8,400.
If one agent converts seven out of 10 listing appointments, every appointment they get is worth $5,880. If their ratio is five out of 10, they’re worth $4,200. Just a few decimal points of improvement here is money in your pocket.
Here are the ratios I like to focus on:
- Conversations to first-time appointments held
- Appointments held to signed clients
- Signed clients to clients under contract
- Under contract to closed
There are so many ratios to focus on, but if I can identify an agent who is struggling in any of these areas, it’s a direct opportunity for increased revenue for both of us.
For reference, here’s an example of what it looks like in Sisu, my platform for analytics and accountability:
Lead source return on investment
Lead source is another big one, and I’ve seen people go crazy with it. You can get really granular — for example, looking at lead source conversion ratios by agent. However, I prefer to keep it simple.
Is the lead source delivering a positive ROI? Great. Let’s pump more money into it. If not, let’s reallocate the money toward something that is.
If I’m going to consider putting money into a paid lead source, I like to look at a few key data points:
- Number of leads
- Number of closings
- GCI (or profit) generated from those closings
From there, I get a pretty clear picture of whether the lead source is working for me or not. It’s important to look at data points such as conversion rate because there is a time investment with leads as well.
If I spend $100 for 500 leads and we convert one, I might feel like I’m getting a huge return — but the time and morale expense for my team to sift through 499 trash leads might tell a different story!
For reference, here’s a snapshot of what this looks like in my Sisu reports:
A lot of agents couldn’t tell you what they’ve made this year. We make it a point to not only know those numbers, but to have a pretty good grasp on what we’ll make in the next three months.
Nothing motivates a (true) salesperson to go pound the phones like an empty pipeline, and a visually empty pipeline will be more powerful still.
Pipeline reviews are a core part of our accountability meetings, of course, but we also make these numbers available via a mobile app to our agents so that they can always get a glimpse of their pipeline, active clients, under contract clients and closings for the year.
If you’re tracking all of the above, you have the foundation to go to the next level with your data.
You’ll hear leaders all across the country talking about gamification. Chances are, the gym that just went up on the corner next to your house has some element of gamification to it. It’s a huge craze because it works. Friendly competition helps take your business to the next level.
On my team, we’ve created all kinds of challenges based on all different kinds of metrics. We load up those metrics into our challenge boards, which we tie to certain incentives and display all around our office.
It’s a fun way to keep everyone involved and we’ve absolutely seen a production boost from it. Here’s what it looks like on our Sisu platform:
These are just some of the important metrics that brokers can use to drive their business and crew toward a strong future.
Brandon Doyle is a Realtor at Doyle Real Estate Team — Re/Max Results in Minneapolis and co-author of Mindset, Methods & Metrics – Winning as a Modern Real Estate Agent. You can follow him on Twitter.